Gold has been quite volatile in 2021, even recording its all-time highs in early August. Due to the surge in the pandemic, many economies have headed into lockdown, which made many economies stumble. Investors turned to the haven assets to shield their portfolios from losses.
Currently, the precious metal is consolidating after it achieved the Credit Suisse flagged $2075 base case objective in August. Although the bank maintains its long-term bullish view of the market, most of its strategists believe that any new highs will not likely be reached until 2021.
Gold extended its correction after the move to the bank’s base case objective of $2075/80 in August for a fall to just near the support at $1837. That is the region of the 23.6% retracement of 2021. The analysts said:
“We look for this to continue to hold to maintain the sideways range for now ahead of an eventual move above $1993 for a fresh look at $2075. An eventual move above here stays looked for a resumption of the core bull trend with resistance seen next at $2175, then $2300.”
Any move below $1,837 could see a bigger setback to around $1,765 and maybe the 38.2% retracement of the whole 2018/2020 bull trend and rising 200-day average. Analysts do not look for weakness to extend below this level. However, if it happens, it would considerably increase the risk that the bull trend is over.
Turning to the hourly chart, it is evident that gold is showing a bearish reversal pattern. That decline has confirmed a rising wedge breakdown on the hourly chart. The bearish reversal pattern shows that the recovery rally from the September 28 low of $1,948 has ended, and the sell-off from the September 16 high of $1,973 has resumed.
